O.CHINNAPPA REDDY,J. - (1.) THE assessee was assessed to super-tax for the assessment years 1968-69 and 1969-70. In the course of the assessment, the Income-tax Officer had treated as "reserves" for the purpose of the Sur Tax Act, 1964, "surplus taxation reserve" and "dividend reserve". Subsequently, he became alive to the existence of the Explanation to Rule 1 of the Second Schedule of the Companies (Profits) Surtax Act, 1964. Immediately, he issued a notice under Section 13 of the Companies (Profits) Surtax Act stating that certain mistakes had crept into his orders of assessment and that " taxation reserve", "dividend reserve" and "surplus" had been wrongly treated by him as "reserves" though under the Explanation they could not be treated as "reserves". The assessee submitted his explanation and, thereafter, the Income-tax Officer reassessed the profits of the assessee by excluding "surplus taxation reserve" and "dividend reserve" from "reserves", The appeal preferred to the Appellate Assistant Commissioner and the second appeal preferred to the Income-tax Appellate Tribunal were dismissed. At the instance of the assessee, the following question has been referred to us for our decision : "whether, on the facts and in the circumstances of the case, the Tribunal has rightly held that there was a mistake apparent from the record which was rectifiable under Section 13 of the Companies (Profits) Surtax Act, 1964?"
(2.) SHRI B. S. Gupta, learned counsel for the assessee, argued that the question whether taxation reserve and dividend reserve could not be treated as reserves, notwithstanding the Explanation, was a debatable question and, therefore, the Income-tax Officer was not justified in invoking Section 13 of the Companies (Profits) Surtax Act, 1964. It is clear from the order of the Income-tax Officer that the notice under Section 13 was issued as he had completely overlooked the Explanation. It is not disputed that where a statutory provision is completely lost sight of, the matter can be treated as an error apparent on record and rectified under Section 13 of the Act. The further question whether there was any debatable issue to be decided by the Income-tax Officer despite the Explanation was a question which the assessee should have raised before the subordinate tribunals. From a perusal of the orders of the Income-tax Officer,. the Appellate Assistant Commissioner and the Income-tax Appellate Tribunal, we do not see that any such question had been raised. The assumption throughout was that the "taxation reserve", "dividend reserve" and "surplus" fall within the mischief of the Explanation, We are, therefore, constrained to answer the reference against the assessee. There will be no order as to costs.;